As lawmakers squabble, car-tag fees poised to rise

April 15, 2009

  -

 

JACKSON -- State legislators are trying to take steps to ensure car-tag prices don''t increase like what''s being feared.  

 

The state Tax Commission voted Tuesday to decrease the discounts people have been receiving for years for their car taxes. The agency has been warning this would happen beginning in July as the state''s car-tax reduction fund runs out of money because of a decline in automobile sales. 

 

The House and Senate have been seeking without success in recent weeks a compromise using new revenues from higher cigarette taxes to replenish the car-tag fund. 

 

"I''m worried, but I think we''ll have a cigarette-tax increase after we see tags start rising because the fund is so low," said Rep. Jeff Smith, D-Columbus. 

 

Lowndes County Tax Assessor/Collector Greg Andrews estimated car-tag prices could increase by a total of about $2 million for automobile owners in his county if nothing is done. 

 

For example, a car tag for a 2007 Toyota in the county valued at $20,997 this year could increase by $346 to $548. The tax on a $48,000 2006 BMW in Columbus could rise from $1,219 to $2,014 -- an increase of $795. 

 

Cars 10 years or older would increase by only $5.50. 

 

Car-tag costs vary according to the value and age of the vehicles and by what the county and city tax rates are. 

 

Legislative negotiators haven''t been able to concur on how much to raise the state''s 18-cent-a-pack cigarette tax, but they''ve agreed to use some of the $100 million or more this would generate to avert higher car-tag prices. 

 

Republican Lt. Gov. Phil Bryant, who presides over the Senate, issued a statement saying he wants "the revenue from a reasonable cigarette tax increase to offset the soaring price of car tags. I urge the House leadership to consider the Senate position and relieve Mississippi families from bearing the burden of higher car tags in these tough economic times." 

 

House Speaker Billy McCoy, D-Rienzi, said increasing the cigarette tax is one option to prevent the increase in tag prices. He said lawmakers are looking for other options as well. 

 

"This is a major situation that is upon us right now," McCoy said. "We''ll deal with it." 

 

During recent bargaining sessions, House negotiators agreed to use $23 million in cigarette-tax revenues to put into the state Motor Vehicle Ad Valorem Tax Reduction Fund, as the Senate wants. But the House-Senate bargainers didn''t agree on the cigarette rate. The House faction said 75 cents and the Senate offered 64 cents, according to the latest compromise offers publicly made. 

 

The Legislature recessed April 1 to take a break and resume efforts on the tax measures and the state budget in May or another time set by House-Senate leaders. 

 

The state Tax Commission''s action Tuesday to reduce the car-tag credit was expected and could provide more impetus for the Legislature to act on putting money into the tag-reduction fund. 

 

Smith said there could be enough "hue and cry" for lawmakers to resolve the predicament like when the public pushed the Legislature to enact tort-reform measures several years ago to limit lawsuits. 

 

"It took the Republican and Democrat membership to finally say we''re going to have to do this," Smith said. 

 

A slump in automobile sales has caused the car tag-reduction fund to dry up to the point of property taxes on vehicles being increased. The fund gets its money from the state tax on auto purchases to reimburse local governments providing the state-mandated discount on automobile tags without the cities and counties losing revenue. 

 

Car owners have been getting a 5.5 percent tax credit on the assessed value of their vehicles each year when they pay their road-and-bridge tax. Their tag-credit amount is prominently noted on top of tax receipts that shows it was authorized by the Legislature''s 1994 session. 

 

With Mississippi car sales'' decline in recent months, the state Tax Commission has been projecting a $30 million deficit by the end of the fiscal year in June for the car-tag reduction fund. 

 

The Associated Press contributed to this report.